IL life insurance missed questions
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a)Level termb)Term to specified agec)Ordinary life policyd)Limited pay whole life
A
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a)Survivor protection.b)Life planning.c)Survivorship insurance.d)Juvenile protection provision.
A
All of the following entities regulate variable life policies EXCEPT a)The Guaranty Association.b)Federal government.c)The SEC.d)The Insurance Department.
A
All of the following statements are true regarding tax-qualified annuities EXCEPT a)Employer contributions are not tax deductible.b)Annuity earnings are tax deferred.c)They must be approved by the IRS.d)Withdrawals are taxed.
A
An insured committed suicide one year after his life insurance policy was issued. The insurer will a)Refund the premiums paid.b)Pay the policy's cash value.c)Pay the full death benefit to the beneficiary.d)Pay nothing.
A
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called a)Consideration.b)Conditions.c)Utmost good faith.d)Acceptance.
A
As a field underwriter, a producer is responsible for all of the following tasks EXCEPT a)Issue the policy that is requested.b)Help prevent adverse selection.c)Solicit business that will fall within the insurer's underwriting guidelines.d)Obtain appropriate signatures on the application for insurance.
A
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a)5 daysb)7 daysc)10 daysd)3 days
A
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a)Guaranteed insurability rider.b)Paid-up additions option.c)Cost of living provision.d)Nonforfeiture option.
A
In insurance, an offer is usually made when a)An applicant submits an application to the insurer.b)The insurer approves the application and receives the initial premium.c)The agent hands the policy to the policyholder.d)An agent explains a policy to a potential applicant.
A
Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must a)Respond to the consumer's complaint.b)Defend the report if the agency feels it is accurate.c)Change the report.d)Send an actual certified copy of the entire report to the consumer.
A
What is the purpose of a disclosure statement in life insurance policies? a)To explain features and benefits of a proposed policy to the consumerb)To obtain important underwriting information from the applicantc)To help consumers compare policy pricesd)To protect agents and insurers against lawsuits
A
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a)Considerationb)Legal purposec)Contract of adhesiond)Acceptance
A
Which of the following describes the tax advantage of a qualified retirement plan? a)The earnings in the plan accumulate tax deferred.b)Distributions prior to age 59½ are tax deductible.c)Employer contributions are deductible as a business expense when the employee receives benefits.d)Employer contributions are not taxed when paid out to the employee.
A
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? a)Universal lifeb)Flexible lifec)Variable lifed)Adjustable life
A
Which of the following would be considered a nonqualified retirement plan? a)Split-dollar planb)401(k)c)Keogh pland)Roth IRA
A
Which policy component decreases in decreasing term insurance? a)Face amountb)Cash valuec)Dividendd)Premium
A
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a)Universal lifeb)Variable lifec)Decreasing termd)Straight whole life
A
Who bears all of the investment risk in a fixed annuity? a)The insurance companyb)The ownerc)The beneficiaryd)The annuitant
A
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a)3 daysb)5 daysc)10 daysd)14 days
A
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? a)Limited pay whole lifeb)Interest-sensitive whole lifec)Life annuity with period certaind)Increasing term
A
f an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a)Settlement option.b)Nontaxable exchange.c)Nonforfeiture option.d)Rollover.
A
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability a)Medical exam and parents' medical historyb)Proof of insurability is not required.c)Medical examd)Her parents' federal income tax receipts
B
A domestic insurer issuing variable contracts must establish one or more a)General accounts.b)Separate accounts.c)Liability accounts.d)Annuity accounts.
B
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT a)Employee and employer contributions are not counted as income to the employee for income tax purposes.b)At distribution, all amounts received by the employee are tax free.c)Employer contributions are tax deductible as ordinary business expense.d)Funds accumulate on a tax-deferred basis.
B
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a)The policyholder has the right to withdraw the accumulations at any time.b)The interest is not taxable since it remains inside the insurance policy.c)The annual dividend is retained by the company.d)The interest is credited at a rate specified by the policy.
B
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? a)The entire living benefit is considered taxable income.b)A portion of the benefit up to a limit is tax free; the rest is taxable income.c)Principal is tax free, but interest is taxed.d)The entire benefit will be received tax free.
B
Equity indexed annuities a)Invest conservatively.b)Seek higher returns.c)Are more risky than variable annuities.d)Are security instruments.
B
Fixed annuities provide all of the following EXCEPT a)Future income payments.b)Hedge against inflation.c)Equal monthly payments for life.d)Minimum guaranteed rate of interest.
B
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a a)Nonqualified annuity.b)Modified endowment contract.c)Accelerated benefit policy.d)Endowment.
B
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than a)Prior to filling out an application for insurance.b)With the policy.c)Upon issuance of the policy.d)Within 30 days after the first premium payment was collected.
B
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's a)Prior insurance.b)Ancestry.c)Credit history.d)Habits.
B
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a)The death benefit can be increased only by exchanging the existing policy for a new one.b)The death benefit can be increased by providing evidence of insurability.c)The death benefit cannot be increased.d)The death benefit can be increased only when the policy has developed a cash value.
B
The premium of a survivorship life policy compared with that of a joint life policy would be a)Half the amount.b)Lower.c)Higher.d)As high.
B
The premiums paid by the employer in a business life insurance policy are a)Never taxable to the employee.b)Tax deductible by the employer.c)Tax deductible by the employee.d)Always taxable to the employee.
B
The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case? a)The Courtb)The beneficiaryc)The benefit must be paid in a lump sumd)The insurance company
B
What does "level" refer to in level term insurance? a)Interest rateb)Face amountc)Premiumd)Cash value
B
What is the timeframe for filing relevant Suspicious Activity Reports? a)Within 90 days of the suspicious transactionb)Within 30 days of initial discoveryc)Within 30 days of the suspicious transactiond)Within 90 days of initial discovery
B
What type of insurance would be used for a Return of Premium rider? a)Annually Renewable Termb)Increasing Termc)Level Termd)Decreasing Term
B
What type of premium do both Universal Life and Variable Universal Life policies have? a)Increasingb)Flexiblec)Level fixedd)Decreasing
B
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? a)The policy will expire at the end of the 20-year period.b)At the end of 20 years, the policy's cash value will equal $100,000.c)The policy premiums will remain level for 20 years.d)If the insured dies before the policy expired, the beneficiary will receive $100,000.
B
Which of the following is NOT the consideration in a policy? a)The promise to pay covered lossesb)The application given to a prospective insuredc)Something of value exchanged between partiesd)The premium amount paid at the time of application
B
Which of the following is TRUE about nonforfeiture values? a)Policyowners do not have the authority to decide how to exercise nonforfeiture values.b)They are required by state law to be included in the policy.c)They are optional provisions.d)A table showing nonforfeiture values for the next 10 years must be included in the policy.
B
Which two terms are associated directly with the way an annuity is funded? a)Renewable or convertibleb)Single payment or periodic paymentsc)Increasing or decreasingd)Immediate or deferred
B
Which type of retirement account does not require the owner to start taking distributions at age 72? a)Traditional IRAb)Roth IRAc)Nonqualified IRAd)Standard IRA
B
hich of the following is another term for an authorized insurer? a)Legalb)Admittedc)Certifiedd)Licensed
B
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a)Ordinary life policyb)Limited pay whole lifec)Level termd)Term to specified age
C
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a)Universal lifeb)Whole lifec)Decreasing termd)Variable life
C
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? a)$0b)$200c)$9,800d)$10,000
C
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a)The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.b)One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies.c)The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.d)The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time.
C
For how long is an insurance company allowed to defer policy loan requests? a)30 daysb)60 daysc)6 monthsd)1 year
C
If a company has a Simplified Employee Pension plan, what type of plan is it? a)The same as an IRA, with the same contribution limitsb)An undefined contribution plan for large businessesc)A qualified plan for a small businessd)The same as a 401(k) plan
C
If the annuitant dies during the accumulation period, who will receive the annuity benefits? a)The insurance companyb)The annuitant's estatec)The beneficiaryd)The annuity owner
C
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? a)$0b)$50,000 (50% of the policy value)c)$100,000d)$300,000 (triple the amount of policy value)
C
The paid-up addition option uses the dividend a)To reduce the next year's premium.b)To accumulate additional savings for retirement.c)To purchase a smaller amount of the same type of insurance as the original policy.d)To purchase a one-year term insurance in the amount of the cash value.
C
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? a)Joint and survivorb)Fixed amount optionc)Interest only optiond)Life income with period certain
C
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called a)Fixed amount.b)Joint life.c)Joint and survivor.d)Fixed period.
C
How are contributions to a tax-sheltered annuity treated with regards to taxation? a)They are never taxed.b)They are taxed as income for the employee.c)They are taxed as income for the employee, but are tax free upon withdrawal.d)They are not included as income for the employee, but are taxable upon distribution.
D
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a)Must be advised that a copy of the report is available to anyone who requests it.b)May sue the reporting agency in order to get inaccurate data corrected.c)Must be informed of the source of the report.d)Are entitled to obtain a copy of the report from the party who ordered it.
C
Variable Whole Life insurance is based on what type of premium? a)Flexibleb)Gradedc)Level fixedd)Increasing
C
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? a)Settlement Clauseb)Nonforfeiture Clausec)Common Disaster Claused)Spendthrift Clause
C
What is the other term for the cash payment settlement option? a)Face amountb)Proceedsc)Lump sumd)Principal amount
C
When must insurable interest exist in a life insurance policy? a)When there is a change of the beneficiaryb)At the time of lossc)At the time of applicationd)At the time of policy delivery
C
Which is true about a spouse term rider? a)The rider is decreasing term insurance.b)Coverage is allowed up to age 75.c)The rider is usually level term insurance.d)Coverage is allowed for an unlimited time.
C
Which nonforfeiture option provides coverage for the longest period of time? a)Paid-up optionb)Accumulated at interestc)Reduced paid-upd)Extended term
C
Which of the following is NOT the consideration in a policy? a)The premium amount paid at the time of applicationb)The promise to pay covered lossesc)The application given to a prospective insuredd)Something of value exchanged between parties
C
Which of the following is TRUE regarding the premium in term policies? a)The premium in term policies is not based on the insured's age.b)Decreasing term policy will have a decreasing premium.c)The premium is level.d)Only level term policy has a level premium.
C
Which of the following statements concerning buy-sell agreements is true? a)Benefits received are considered income taxable.b)Buy-sell agreements pay in the event of a medical emergency.c)Buy-sell agreements are normally funded with a life insurance policy.d)Premiums paid are deductible as a business expense.
C
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a)Policy loans are taxable distributions.b)Accumulations are tax deferred.c)Withdrawals are not taxable.d)Distributions before age 59 1/2 incur a 10% penalty on policy gains.
C
Which two terms are associated directly with the way an annuity is funded? a)Immediate or deferredb)Renewable or convertiblec)Single payment or periodic paymentsd)Increasing or decreasing
C
f an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? a)The examinerb)The applicantc)The insurerd)The cost of the examination will be waived.
C
he premiums paid by the employer in a business life insurance policy are a)Always taxable to the employee.b)Never taxable to the employee.c)Tax deductible by the employer.d)Tax deductible by the employee.
C
hich of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a)Policy loans are taxable distributions.b)Accumulations are tax deferred.c)Withdrawals are not taxable.d)Distributions before age 59 1/2 incur a 10% penalty on policy gains.
C
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be a)Certified.b)Qualified.c)Approved.d)Authorized.
D
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) a)Keogh Plan.b)Roth IRA.c)SEP.d)403(b) Plan (TSA).
D
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? a)On the designated effective dateb)On the application datec)When the agent submits the application to the company and the company issues a conditional receiptd)When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
D
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? a)Fixedb)Flexible premiumc)Immediated)Deferred
D
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a)Variable lifeb)Universal lifec)Whole lifed)Decreasing term
D
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a)The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time.b)The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.c)One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies.d)The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
D
Annually renewable term policies provide a level death benefit for a premium that a)Decreases annually.b)Remains level.c)Fluctuates.d)Increases annually.
D
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a)Consideration.b)Legal purpose.c)Offer and acceptance.d)Conditions.
D
In insurance, an offer is usually made when a)The insurer approves the application and receives the initial premium.b)The agent hands the policy to the policyholder.c)An agent explains a policy to a potential applicant.d)An applicant submits an application to the insurer.
D
What is another name for interest-sensitive whole life insurance? a)Variable lifeb)Term lifec)Adjustable lifed)Current assumption life
D
What is the benefit of choosing extended term as a nonforfeiture option? a)It matures at age 100.b)It allows for coverage to continue beyond maturity date.c)It can be converted to a fixed annuity.d)It has the highest amount of insurance protection.
D
What type of insurance would be used for a Return of Premium rider? a)Level Termb)Decreasing Termc)Annually Renewable Termd)Increasing Term
D
Which of the following best describes fixed-period settlement option? a)Only the principal amount will be paid out within a specified period of time.b)The death benefit must be paid out in a lump sum within a certain time period.c)Income is guaranteed for the life of the beneficiary.d)Both the principal and interest will be liquidated over a selected period of time.
D
Which of the following is NOT true of life settlements? a)They could be used for a key person coverage.b)They could be sold for an amount greater than the current cash value.c)They involve insurance policies with large face amounts.d)The seller must be terminally ill.
D
Which of the following is NOT true regarding Equity Indexed Annuities? a)The insurance company keeps a percentage of the returns.b)They have guaranteed minimum interest rates.c)They are less risky than variable annuities.d)They earn lower interest rates than fixed annuities.
D
Which of the following is a feature of a variable annuity? a)Payments into the annuity are kept in the company's general account.b)Interest rate is guaranteed.c)Securities license is not required.d)Benefit payment amounts are not guaranteed.
D
Which of the following is a key distinction between variable whole life and variable universal life products? a)Variable universal life is regulated solely through FINRA.b)Variable whole life allows policy loans from the cash value.c)Variable universal life has a fixed premium.d)Variable whole life has a guaranteed death benefit.
D
Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home? a)Accidental deathb)Guaranteed insurabilityc)Payor benefitd)Long-term care
D
Which of the following statements about a suicide clause in a life insurance policy is TRUE? a)Suicide is covered for a specific period of years and excluded thereafter.b)Suicide is covered as long as the policy is in force.c)Suicide is excluded as long as the policy is in force.d)Suicide is excluded for a specific period of years and covered thereafter.
D
hich of the following is true regarding taxation of accelerated benefits under a life insurance policy? a)They are always taxable to chronically ill insured.b)They are always taxed.c)There is a 10% penalty for early distribution of the death benefit.d)They are tax free to terminally ill insured.
D